Rachel Reeves tax raid sees UK jobs hit two-year low | Personal Finance | Finance
Britain’s jobs market has slumped to its weakest point in nearly two years amid claims that a tax raid by the Chancellor is driving up business costs and putting thousands of roles at risk.
The number of people on company payrolls fell to 30.3 million in July – the lowest since October 2023 – after a 164,000 drop in staff compared with a year earlier, according to the Office for National Statistics.
Hospitality and retail have been hit hardest, with pubs, restaurants and shops shedding staff after being clobbered by steep hikes in the national minimum wage and employer National Insurance contributions in April.
Vacancies across the economy have now fallen for a record 37 months in a row, down to 718,000 in the three months to July.
ONS economic statistics director Liz McKeown said: “The number of employees on payroll has now fallen in ten of the last twelve months, with these falls concentrated in hospitality and retail. Job vacancies, likewise, have continued to fall, also driven by fewer opportunities in these industries.”
The official figures paint a mixed picture with a drop in the number of people claiming unemployment benefits and the proportion of the workforce considered economically inactive.
Wages are still rising faster than prices – offering some relief to households – with regular pay up 5% year-on-year, and the biggest increases of 6.8% in retail and hospitality.
Kate Shoesmith, Deputy Chief Executive of the Recruitment and Employment Confederation, said the labour market “remains challenging” and warned that Reeves’ April tax hikes have left many firms unable to hire.
“If we are to harness the optimism businesses have for future recruitment, the Autumn Budget must give employers more bandwidth on costs,” she said.
“Now is the time for pragmatism before any further decisions on pay rates. Business cannot afford further cost rises.”
Economists said the figures give little comfort to the Bank of England, which is more worried about “sticky” inflation than job losses.
Matt Swannell, Chief Economic Adviser at the EY ITEM Club, said: “Rising costs from the national living wage and employer National Insurance have seen hiring plans weaken.
“The gradual loosening of the jobs market is not enough to ease concerns about inflation. No change to interest rates next month looks almost certain, while a skipped cut in November is a distinct possibility.”
Unemployment stayed at 4.7% between April and June – but with falling payroll numbers, shrinking vacancies and stubbornly high business costs, experts fear Britain could be heading for a prolonged period of stagnation in the labour market.
